Clamour for stimulus to kick start demand
The government needs to go in for a major fiscal push on the demand side to return to positive growth trajectory, according to an industry survey released on Wednesday.
“In the absence of a major fiscal push on the demand side, we could end up being stuck in a quagmire of low demand and low-income cycle. If we have to return to the positive growth trajectory, the time for bold and decisive action is now,” Ficci president Sangita Reddy said.
Reddy said reviving the economy requires sustained efforts, especially when we have seen that in the first quarter, the gross domestic product (GDP) has suffered a major blow. In May, the government had announced a new financial package of over Rs 20 lakh crore.
The Ficci-Dhruva Advisors survey, conducted in August among 166 firms, showed that some of their operational parameters were improving as the economy is progressively opening up in phases.
However, improvement in performance on a sustained basis will have to wait, Ficci said.
Dhruva Advisors LLP chief executive Dinesh Kanabar said the survey results were a reflection of the gradual improvement in the Indian economy after the staggered unlocking.
“In the next phase, it is imperative that the critical business parameters continue to improve and are fast-tracked with government support and stimulus,” Kanabar said. He added that this would help the overall economy to grow.
The chamber said the government and regulatory institutions must continue to lend strength to businesses through all possible measures as well as improve those already announced based on feedback from stakeholders.
The survey respondents felt additional cash transfers for migrant workers, the poor and farmers, a temporary reduction in GST rates, an increase in government procurement; front-ending infrastructure projects and part-funding of wages would help.
They also suggested that the Centre must come out with a uniform policy for entry of tourists across various states as movement of people will promote regional economies.
In case of pending dues from a government entity, either the government should release the funds against the bank guarantee which will be part of the restructuring programme or the government should guarantee the release of these funds, they suggested.
Hospitality, tourism, retail, healthcare, real estate and aviation sectors need a special package, said the surveyed companies.
India’s travel and tourism industry and the entire value chain is likely to lose around Rs 5 lakh crore, or $65.57 billion, because of the Covid-19 pandemic.
Hotel occupancy is likely to be at 30 per cent till early next year, according to a study by CII and hospitality consulting firm Hotelivate.
The figures are quite alarming and the industry needs immediate measures for survival, the report says.